Richemont sells Lancel to smaller peer Piquadro
today Jun 4, 2018
Richemont had tried to sell the label once before, five years ago, but failed to do so and restructured it instead. However, in the intervening years, the unit has proved to be a weak performer in the Richemont portfolio and while its other ultra luxury brands such as Cartier and Chloé have made a more positive impact, Lancel has remained lossmaking.
Given that the new owner, Piquadro, is listed on the Milan stock exchange, it could mean we’ll get to hear more details in future results announcements about just how well or badly Lancel is faring.
For now though, not a great deal is known. Richemont has simply said that the sale “will have no material impact on” its balance sheet, cash flow or results for the year ending 31 March 2019.
When the sale talks were announced a couple of months ago, analysts estimated that Lancel was starting to see its sales rise with suggestions of around €130 million-€150 million a year. But that was a tiny percentage of Richemont’s overall sales, which are approaching €11 billion.
One analyst also expected Lancel to post an annual loss of at least €40 million, although another suggested that it might now be breaking even. That latter analyst also suggested the sale price could be roughly equivalent to one year’s turnover for the brand.
It's interesting that new owner Piquadro is a smaller entity than Lancel with sales of less than €80 million a year and it now has a big task on its hands. The company has made other acquisitions, buying leather goods maker The Bridge around 18 months ago. But this purchase will be its most ambitious yet and heightens its presence in a high-margin but also hugely-competitive sector.
The market seems to have approved of the deal though, sending Piquadro shares up almost 7% in early trading on Monday.
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